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Wednesday, May 2, 2018

arbitration - Jurisdiction of India courts -challenged the legality, validity and correctness of the award made by the arbitrators in respondent's favour in one international commercial arbitration proceeding between the appellant (Union of India) and the respondent (foreign company).= In our opinion, though, the question regarding the “seat” and “venue” for holding arbitration proceedings by the arbitrators arising under the Arbitration Agreement/International Commercial Arbitration Agreement is primarily required to be decided keeping in view the terms of the arbitration agreement itself, but having regard to the law laid down by this Court in several decisions by the Benches of variable strength as detailed above, and further taking into consideration the aforementioned submissions urged by the learned counsel for the parties and also keeping in view the issues involved in the appeal, which frequently arise in International Commercial Arbitration matters, we are of the considered view that this is a fit case to exercise our power under Order VI Rule 2 of the Supreme Court 12 Rules, 2013 and refer this case (appeal ) to be dealt with by the larger Bench of this Court for its hearing We, accordingly direct the Registry to place the matter before the Hon'ble the Chief Justice of India for constituting the appropriate Bench for hearing and disposal of this appeal.

REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPERAL NO. 4628 OF 2018
[Arising out of SLP (C) No.31356 of 2016]
Union of India .. Appellant(s)
Versus
Hardy Exploration and Production
(India) INC .. Respondent(s)
J U D G M E N T
Abhay Manohar Sapre, J.
1) Leave granted.
2) This appeal arises from the final judgment and
order dated 27.07.2016 passed by the High Court of
Delhi at New Delhi in FAO No.59 of 2016 whereby the
Division Bench of the High Court dismissed the
appeal filed by the Union of India (appellant herein)
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challenging the order dated 09.07.2015 passed by
the Single Judge in OMP No.693 of 2013 and order
dated 20.01.2016 in Review Petition No.400 of 2015
in OMP No.693 of 2013.
3) In order to appreciate the controversy involved
in the appeal, few relevant facts, which lie in a
narrow compass, need to be stated hereinbelow.
4) This appeal arises out of the proceedings (OMP
693/2013) filed by the appellant (Union of India)
against the respondent-Company under Section 34 of
the Arbitration and Conciliation Act, 1996
(hereinafter referred to as “the Act”) wherein the
appellant had challenged the legality, validity andcorrectness of the award made by the arbitrators inrespondent's favour in one international commercialarbitration proceeding between the appellant (Unionof India) and the respondent (foreign company).
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5) The respondent contested the appellant's
application by raising several objections. One such
preliminary objection, which went to the root of the
application, was in relation to the maintainability of
appellant's application filed under Section 34 of the
Act in Courts in India.
6) According to the respondent, the Indian Courts
have no jurisdiction to entertain the appellant's
application filed under Section 34 of the Act to
challenge the legality and correctness of an award in
question.
7) The Single Judge by order dated 09.07.2015
upheld the respondent's preliminary objection and
held that keeping in view the terms of the agreement
in question coupled with the law laid down by this
Court in several decisions governing the issues
arising in the case, Indian Courts have no
jurisdiction to entertain the application filed by the
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appellant under Section 34 of the Act to question the
legality and correctness of the award in question and
accordingly dismissed the appellant's application as
being not maintainable in Indian Courts.
8) Since the appellant's application was dismissed
on the ground of lack of jurisdiction of the Indian
Courts, the Single Judge did not consider it
necessary to decide the issues arising in the case on
the merits.
9) The appellant (Union of India) felt aggrieved by
the order of the Single Judge, filed appeal under
Section 37(2) of the Act before the Division Bench of
the High Court at Delhi.
10) By impugned judgment, the Division Bench
concurred with the reasoning and the conclusion
arrived at by the Single Judge and held that the
Indian Courts have no jurisdiction to entertain the
appellant's application under Section 34 of the Act to
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question the legality of award rendered in
international commercial arbitration proceedings.
11) It is against this order, the Union of India felt
aggrieved and has filed the present appeal by special
leave in this Court.
12) Heard Mr. Tushar Mehta, learned Additional
Solicitor General for the appellant and Dr. Abhishek
Manu Singhvi, learned senior counsel for the
respondent.
13) At the outset, we may state that Mr. Tushar
Mehta, learned ASG appearing for the appellant
(Union of India) and Dr. Abhishek Manu Singhvi
learned senior counsel appearing for the respondent
very ably presented their respective arguments in
support of their case. The arguments indeed lasted
for few months in intervals with lucidity.
14) In their submissions, both the learned senior
counsel argued on almost every issue, which has
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arisen in the appeal directly, indirectly and even
remotely.
15) Learned counsel, in support of their
submissions, cited almost every decision of this
Court including English Courts decisions which dealt
with the subject and the issues arising in this case
and made sincere attempt to either distinguish
or/and place reliance on them to show how and why
these decisions apply to the facts of the case at hand
or how and why they do not apply.
16) Learned counsel for the parties mainly cited
these cases:
Foreign Cases: Naviera Amazonica Peruana S.A.
vs. Compania Internacional De Seguros Del Peru
(1988) (1) Lloyd's Law Reports 116, Hiscox vs.
Outhwaite (1992) 1 AC 562, Union of India vs.
McDonnell Douglas Corpn. (1993) 2 Lloyd’s Law
Rep. 48, C vs. D (2007) EWCA Civ 1282 (CA), C vs. D
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(2008) 1 Lloyd’s Law Rep 239, Braes of Doune Wind
Farm (Scotland) Limited vs. Alfred McAlpine
Business Services Limited (2008) EWHC 426 (TCC),
Shashoua and Ors. vs. Sharma (2009) EWHC 957
(Comm.), Sulamerica Cia Nacional De Seguros S.A.
& Ors. vs. Enesa Engenharia SA & Ors., (2012)
EWCA Civ 638, (1) Enercon GMBH (2) Wobben
Properties GMBH vs. Enercon (India) Ltd. (2012)
EWHC 3711 (Comm), Govt. of India vs. Petrocon
India Ltd. (2016) SCC Online MYFC 35.
Indian Cases: National Thermal Power Corporation
vs. Singer Co. And Ors. (1992) 3 SCC 551,
Sumitomo Heavy Industries Ltd. vs ONGC Ltd.
and Ors. (1998) 1 SCC 305, Sundaram Finance Ltd.
vs. NEPC India Ltd. (1999) 2 SCC 479, Bhatia
International vs. Bulk Trading S.A. and Anr.(2002)
4 SCC 105, Venture Global Engineering vs. Satyam
Computer Services Ltd. & Anr. (2008) 4 SCC 190,
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Indtel Technical Services Pvt. Ltd. vs. W.S. Atkins
Rail Ltd., (2008) 10 SCC 308, Bank of India & Anr.
vs. K. Mohan Das & Ors., (2009) 5 SCC 313,
Citation Infowares Ltd. vs. Equinox Corporation
(2009) 7 SCC 220, State of Rajasthan & Anr. vs.
Ferro Concrete Construction (P) Ltd. (2009) 12
SCC 1, Videocon Industries Limited vs. Union of
India and Anr. (2011) 6 SCC 161, Dozco India
Private Ltd. vs. Doosan Infracore Co. Limited
(2011) 6 SCC 179, Yograj Infrastructure Limited
vs. Ssang Yong Engineering and Construction Co.
Limited (2011) 9 SCC 735, Bharat Aluminium
Company vs. Kaiser Aluminium Technical
Services INC (2012) 9 SCC 552, Enercon (India)
Ltd. & Ors. vs. Enercon GMBH & Anr. (2014) 5 SCC
1, Reliance Industries Limited and Anr. Union of
India (2014) 7 SCC 603, Harmony Innovation
Shipping Ltd. vs. Gupta Coal India Ltd. & Anr.,
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(2015) 9 SCC 172, Union of India vs. Reliance
Industries and Ors.(2015) 10 SCC 213, Bharat
Aluminum Company vs. Kaiser Aluminum
Technical Services INC (2016) 4 SCC 126, Eitzen
Bulk A/S & Ors. vs. Ashapur Minechem Ltd. &
Anr. (2016) 11 SCC 508, Imax Corporation vs
E-City Entertainment(India) Pvt. Ltd. (2017) 5 SCC
331, Roger Shashoua and Ors. vs. Mukesh Sharma
& Ors., 2017 (14) SCC 722.
17) The argument of both the learned senior
counsel mainly centered around to one question
which, in our opinion, does arise in the appeal,
namely, when the arbitration agreement specify the
“venue” for holding the arbitration sittings by the
arbitrators but does not specify the “seat”, then on
what basis and by which principle, the parties have
to decide the place of “seat” which has a material
bearing for determining the applicability of laws of a
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particular country for deciding the post award
arbitration proceedings.
18) Several other ancillary questions connected with
the main question were also urged by the learned
senior counsel with the aid of law laid down in the
aforementioned cases and the terms of the
arbitration agreement in question.
19) Learned counsel for the parties also addressed
the Court by pointing out that some decisions which
have bearing over the questions arising in this appeal
have been rendered by the Constitution Bench, some
by Three Judge Bench and remaining by the Two
Judge Bench.
20) One of the arguments of Dr. Singhvi, learned
senior counsel was that the decision rendered by
Three Judge Bench in the case of Sumitomo Heavy
Industries Ltd. vs. ONGC Ltd. & Others (supra) on
which great reliance was placed by Mr. Tushar
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Mehta, learned ASG has lost its efficacy, though
approved by another recent decision of Three Judge
Bench in Bharat Aluminum Company vs. Kaiser
Aluminum Technical Services INC (supra), for the
reason that it was rendered under the Arbitration
Act, 1940 which now stands repealed by Arbitration
Act, 1996 and secondly, it was rendered in relation to
Section 9 of the Foreign Awards (Recognition and
Enforcement) Act, 1961 which also now stands
repealed by 1996 Act.
21) It was his submission that while approving the
ratio of Sumitomo Heavy Industries Ltd. (supra)
these two factors which have some relevance on its
efficacy do not seem to have been examined in the
case of Bharat Aluminum Company (supra) .
22) Dr. Singhvi also urged that what is the effect of
UNCITRAL Model Law, when they are made part of
the arbitration agreement for deciding the question of
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“seat” has also not been so far decided in any of the
earlier decisions.
23) In our opinion, though, the question regardingthe “seat” and “venue” for holding arbitrationproceedings by the arbitrators arising under theArbitration Agreement/International CommercialArbitration Agreement is primarily required to bedecided keeping in view the terms of the arbitrationagreement itself, but having regard to the law laiddown by this Court in several decisions by theBenches of variable strength as detailed above, andfurther taking into consideration the aforementionedsubmissions urged by the learned counsel for theparties and also keeping in view the issues involvedin the appeal, which frequently arise in InternationalCommercial Arbitration matters, we are of theconsidered view that this is a fit case to exercise ourpower under Order VI Rule 2 of the Supreme Court12Rules, 2013 and refer this case (appeal ) to be dealtwith by the larger Bench of this Court for its hearing.
24) It is for this reason, we refrain from recording
our findings on any of the issues arising in the
appeal and leave the questions/issues to be dealt
with by the appropriate larger Bench.
25) We, accordingly direct the Registry to place thematter before the Hon'ble the Chief Justice of Indiafor constituting the appropriate Bench for hearingand disposal of this appeal.
.………………………………..J
(R.K. AGRAWAL)
..………………………………J.
(ABHAY MANOHAR SAPRE)
New Delhi,
May 01, 2018
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